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Families face big bills for useless trusts

TENS of thousands of families will be stuck with useless trusts when the chancellor announces details of a crackdown, expected in his pre-budget report on Thursday.

Families could face a tax bill, plus costs to dismantle the schemes that could run into thousands of pounds.

Accountants and advisers sold home-loan schemes and family-wealth trusts to those worried about inheritance tax (IHT) as house prices soared.

The typical family home in the southeast is now worth £266,000, just above the IHT threshold of £263,000. If your estate is worth more than the allowance, your heirs are liable for IHT at 40% on the excess.

The schemes typically cost 1% of a property’s value to set up and in the past it was common for advisers to pocket £10,000. But the trusts are not expected to survive when details of the legislation are confirmed.